I'm not American so I'm probably just used to other systems, but does a public service need to be profitable?
Think of it like a "cost centre" in a business, does the utility outweigh the price?
Think of it like a "cost centre" in a business, does the utility outweigh the price?
So while I agree with you that we don’t necessarily need a profit motive at the usps, at the same time the taxpayers don’t need to subsidize cheap crap from China.
That's the real kicker in this whole thing.
Given how ubiquitous ordering stuff from China is these days I'm not really sure the first impression of this being some good deal is accurate.
In fact subsidizing transport to a degree might probably have a progressive effect because low wage earners are more likely to order cheaper foreign goods.
So really what was happening is that other people or companies sending mail or packages were subsidizing overseas mail and packages.
"they're just subsidizing themselves" -> they are spending money that they wouldn't choose to spend if they had fine grained control over the taxes they paid.
You pay health insurance so you don't have to pay the full cost later on. And it could easily be that the shipping cost + taxes generally means that the system stays afloat. And besides, if you tax correctly, it wouldn't be the same rate for everyone (income taxes should be higher for those making more, for example) nor would it be more than the flat shipping costs so long as the tax money actually went to the postal service.
In both cases, are the employees getting paid fair wages?
Does the tax mean I'm not getting charged for receiving packages? Are there hidden costs to the lower amount?
When you buy health insurance you pay more than the expected value of the full cost, both as a result of the cost of providing the insurance and the over-consumption as a result of insurance making patients price insensitive.
The reason you buy insurance is in case your medical bills are more than average and you can't afford them. For the average person the insurance is a net loss but the cost savings of not having it aren't worth the risk.
> And it could easily be that the shipping cost + taxes generally means that the system stays afloat.
If the system is worth more than it costs then it will be able to charge prices that allow it to stay afloat. We generally don't need systems that cost more than they're worth.
> And besides, if you tax correctly, it wouldn't be the same rate for everyone (income taxes should be higher for those making more, for example) nor would it be more than the flat shipping costs so long as the tax money actually went to the postal service.
Everybody always wants somebody else to pay for it. But it's the people in the middle and not at the top who actually pay for stuff, because they're the only ones numerous enough to do it.
> In both cases, are the employees getting paid fair wages?
That sounds like a question for the employees and not the customers. Naturally if they're getting paid below market rates they should consider seeking other employment.
> Does the tax mean I'm not getting charged for receiving packages?
You can already get charged for receiving packages. It's called COD. Nobody really uses it because it's much more convenient to charge up front than have the carrier try to collect payment from the recipient.
In some countries without mandatory health insurance, medical cost is a lot lower and simpler. If major medical emergency happens, then families usually need to take out a loan. But for regular medical issues, you save for it. This includes issues like childbirth which in America very few people can afford without insurance.
I imagine, having health or car insurances gives some sense of false security, which leads to poor lifestyle choices or driving fast, which in turn causes one to experience bad health or accidents, thus using their insurance. Which causes insurance rates to rise. And one is not directly negotiating with hospital or bodyshop, those prices rises too.
... And the system is more efficient because of standardization and pooling money together.
The US system doesn't have much of any standardization, and in general has a lot more facilities than it might otherwise need - plus things like some of the government provided insurance not paying enough and not having the ability to act like public insurances. These all make it more expensive. Heck, even standardizing insurance coding would help.
It is cruel to expect folks to take out a loan for medical emergencies. In some places, you die if you can't pay. It isn't like health is completely under your control: Type I diabetics couldn't prevent it (for example). Many cancers can't be avoided. And so on.
Negotiating with medical facilities is a pipe dream. There are many cases where you simply don't have the choice (emergency) nor the mental space to do it (for example, do you know how to judge what facilities are better for a gall bladdar removal surgery? How about where to get cancer treatment? How does one judge any of that?)
Does care insurance cause you to drive fast? Seriously? Isn't that more cultural than whether or not you have insurance?
"You can see from the above anything under 4 ounces is actually cheaper to ship from China. From 4 ounces to 8 ounces the rates are pretty comparable. Once you start hitting about 2 lbs, the prices from shipping within the U.S. start to get comparatively cheaper and cheaper than shipping from within China."
I seriously doubt this was ever an existential in the sense of the shipping cost itself destroying a business. China is simply able to produce cheaper things because they have lower labour cost and so on, and that is actually good for American consumers. It's simply free trade.
If anything I see a much bigger threat in the ability of the US to raise the prices, because given the current administration it may be used as a protectionist tool.
[1]https://www.statista.com/statistics/974065/cross-border-deli...
How can it possibly be free trade if one side is subsidized and one side is not.
This is a good thing, I hope same thing will happen in Europe, if it haven't already. The law/agreement in europe is to help people send hand written letters across the globe, and to help people from poor regions send letters ro the more developed regions on earth.
This was the case back then, now, the same agreement is used so that you can send stuff worldwide without any fee. That is NOT free trade.
https://www.svenskhandel.se/contentassets/5db334c2740b4b7ebe...
Surely it does the opposite - someone living in the poorest country in world would have to pay rich-European country rates to access their postage system.
Btw. I strongly suspect that the international rules on charging for postage were chosen for simplicity of implementation and not out of a sense of altruism for people in poor countries.
If you believe it's still neccessary to keep sending letters across the world a neccessity, well, then we could only allow thin letters that can not hold anything else than a written letter - no items, what so ever.
Your original message seemed to express concern that the original purpose of the rules for international shipping was to support people in poorer countries?
If this cross-subsidisation is removed, then people in poorer countries will pay more and people in richer countries will pay less to send stuff to each other. That's simple arithmetic.
And I was wondering how someone could simultaneously support such a policy while expressing concern about access to international post in poorer countries.
It was definetly not designed to be abused by the world's biggest companies to be able to ship stuff for near zero cost world-wide. If you can't see how it's clearly being abused, I don't know what to say.
A trade union created in the late 1800's that made sense then, may need a change now. Although alot of damage is already made.
The problem is not physical letters, it's the postage of goods across the world, being cheaper because of subsizidies.
I've read many e-commerce blogs with US sellers lamenting that they can't compete with China on $5 items because shipping costs are 5X as much within US. Maybe not killing businesses, but definitely keeping many out of the market.
> China is simply able to produce cheaper things because they have lower labour cost and so on, and that is actually good for American consumers
Lower, but not nearly as low as it used to be. Minimum wage in China is almost 1/2 of US now.
There's real instances of shipping cost offsetting lower labor. Manhole covers are a somewhat famous example. They're still made in USA because shipping offsets increased labor and materials. Would it be the same for ecommerce? I'm not aware of any studies but to me, the increased cost and shipping time make it plausible
The major thing compared to local stuff is lack of VAT on cheap foregin goods. Noone locally can compete with that.
Also most of the stuff I buy on Aliexpress (electronic components, SBCs, ...) simply isn't available locally, or is simply bought there and resold locally (because the manufacturer's main shop is Aliexpress).
This was the most nonsensical self-destructive American policy that strangely never caught much mainstream media attention.
1. https://www.affirmhealth.com/blog/word-on-the-street-fentany...
Please read this briefing by the US trade commission https://www.usitc.gov/publications/332/executive_briefings/e...
"The illicit trade follows the standard e-commerce model of small-scale shipments and B2C and B2B distribution channels. The trade is SME-focused, with small-scale Chinese suppliers primarily exporting to individuals and small independent U.S. criminal networks.China was the source of 97 percent of inbound shipments of high-purity fentanyl during 2016 and 2017"
"Given the high purity of Chinese fentanyl, most illicit imports are less than 700 grams (1.5 lbs.) per shipment. "
So what? 100 grams would be bought, by the numbers above, for $600 and sold for $8,000. If shipping cost $200, no one would care. That would add $2,000 in shipping costs to the full kilogram, but, again, no one would care. It's just not significant.
Do you have an argument to advance that isn't ludicrous on its face?
1. Chinese fentayl shipments do not need to have high weight due to purity. Mentioned explicitly in the trade commission report linked above.
2. Due to 1), it is convenient to leverage e-packet shipment as inspection of massive volume of e-packet shipments is near impossible.
3. Small-scale US businesses were adversely affected by e-packet rates https://www.theatlantic.com/technology/archive/2018/10/trump...
> It is not a matter of the shipping cost.
Seems like your original point was centered on shipping costs destroying domestic businesses. In light of the downvotes it became mostly a matter of drug imports in small, cheap packages:
> most fentayl imports are less than 700 grams - which get lost in the massive flood of UPS e-Packet shipments and thus near impossible to inspect
Which is irrelevant, shipping costs (within reason) won't change this.
I made both points right at the beginning, though the thread got focused around one of them.
1. e-packet shipping cost adversely affecting US businesses
2. e-packet being used to hide fentayl shipments thanks to massive volume and delivery convenience. (cheap and fast)
"Which is irrelevant, this will be the case regardless of the shipping costs, within reason."
I fail to understand this statement. How will reduction of e-packets - one of the major causes of the bloat of international packages not help in inspection ?
If you reduce the total number of e-packets by removing the subsidy, then it becomes far easier to inspect which packages have fentayl and which do not. EMS shipments apparently quadrupled after the e-packet scheme was introduced which adversely affected all inspection procedures as agencies could not cope with the volume.
Reduce the volume by removing the subsidy - the inspection agencies can then manage their job.
[1] https://www.dea.gov/sites/default/files/2020-03/DEA_GOV_DIR-...
Just because opponents will likely evolve their tactics in the future should not prevent one from mitigating their extraordinarily successful tactic that is running in the present.
In FY 2012, USPS handled about 27 million ePackets from China. This increased to nearly 500 million ePackets by 2017. (Thanks to that disastrous subsidy agreement in 2011)
None of our inspection agencies could cope with this volume. Remove the discount-from-China subsidy, this will automatically reduce the volume of all e-packets and thus will ameliorate the load on inspection agencies.
Congress is responsible for the rates. Politics and likely donor interests are why the rates are this way.
What's sickening about this? It's different quality of service. Your $5 package will be received in a few days. With $.50 shipping, your Chinese trinket will be delivered in a couple of months.
> So while I agree with you that we don’t necessarily need a profit motive at the usps, at the same time the taxpayers don’t need to subsidize cheap crap from China.
Too late for that. China is world's manufactory. Your stuff will be shipped from China one way or another.
Given that, subsidising direct shipping from China is the reasonable thing to do. Otherwise you will be paying a 5-10x markup to middlemen for the exact same item.
The system was illogical. Whether you want to say that US shipping is too expensive, or Chinese shipping to the US too inexpensive is unimportant.
It's shipped by air. It is so slow because of sorting, customs, paperwork. The last mile postal shipment is actually quite fast in USA.
Not an American, but I believe there's a 2006 bill that prevents USPS from selling services below the cost. Learned about it in a John Oliver's video [1], mentioned somewhere else in this thread. I'd guess that Chinese epackets are part of an international agreement, so they are exempt.
> The system was illogical.
It would be illogical if USPS had flexible costs.
But the USPS costs are more or less fixed. The mailman will go his round every day and will get his salary, even if he has little to deliver. So, you may as well have him deliver Chinese epackets, for whatever price the Chinese are willing to pay. And that's a good deal for the public. Otherwise the $1 trinket for China would be $6 (if Chinese had to pay full shipping), or $10 (if bought through a US-based reseller).
I think that’s only true until it arrives in the US though and USPS delivers the package to your door. Sure, total time is long, but the cost to USPS seems similar?
Here’s a planet money episode on the topic.
https://www.npr.org/sections/money/2018/08/01/634737852/epis...
If domestic mail is too expensive maybe let's address that.
It's not like that isn't already done all over the place.
It's not like that would happen often. They'd quickly adapt and start charging more for sending, making it a non-issue most of the time
I don't see any problem if taxpayer is the one is paying cheaper price as the end result. It's not like Chinese are charging full rate and sending for dirt cheap and booking mega profits like that.
And if a student can order cheaper pen and paper from china or a mechanic can order cheaper nut bolts and screwdriver from china, what's the harm?
https://www.quora.com/Does-China-ePacket-hurt-American-busin...
"COMBATTING THE OPIOID CRISIS: EXPLOITING VULNERABILITIES IN INTERNATIONAL MAIL" https://www.hsgac.senate.gov/imo/media/doc/Combatting%20the%...
US Senate Staff Report: "Fentanyl Flows from China" https://www.uscc.gov/sites/default/files/Research/Fentanyl%2...
You can find extreme examples in anything.
But let me tell you, sometime back I was unemployed. I bought machining tools from china and setup a good business, I could have never been able to afford local manufactured tools without accuring debt.
I paid a lot of money in taxes as my business grew, I bought better quality machines which were locally available from local suppliers because local suppliers ensures a maintenance package.
LOL, do you really think people buy chinese fentanyl 'cos the shipping per gram is a few cents cheaper than it would be if they had to pay higher shipping rents?
It also contributes to the dismounting of American industry. When the poor people can't make any money to buy things made in USA because their jobs got exported to China, the next level of workers in USA will also lose their jobs and this will just continue for the next level and sooner or later hit the software world too.
Please read this report by the US trade commission. I can quote further citations if needed, but this one is a succinct briefing. https://www.usitc.gov/publications/332/executive_briefings/e...
Please also read the United States Senate Sub-committee on Investigations Staff Report.
https://www.hsgac.senate.gov/imo/media/doc/Combatting%20the%...
"The preferred method of the international online (fentayl) sellers is Express Mail Service (“EMS”), a global delivery service for documents and merchandise contained in letters and package."
Further reading in that report will show you how difficult it was to scan/inspect e-packet shipments due to immense volume.
There's no reason American taxpayers and postal rate payers should be subsidizing shipping costs for Chinese Ebay/Amazon merchants at the expense of their American competitors.
But China isn't a developing country anymore; it's the #2 economy of the world. And the volume isn't small either. The rule should not apply to them, but it's hard to change.
The fact that you have to explicitly point this out to derriz ...
Worth noting also that the USPS in particular has been politically sabotaged (and they explain how to fix it): https://ips-dc.org/how-congress-manufactured-a-postal-crisis...
I could go on, I guess (random google) an article like this sums it up for me: https://www.singlelunch.com/2018/10/01/bad-economics-shame-o...
For all I know, there could be articles that do debunk MMT but this one doesn't.
But in this case, the US (and EU) are subsidizing products that compete with local products, undercutting local products in price, in quality, and often not complying with safety standards, while also avoiding customs and sales taxes because the individual packages are too small to meet the limit.
You're basically supporting unfair competition, and paying to undermine your own quality standards and taxes. There's no benefit at all to the country that's paying for this.
Shipping is a major part of the equation so it's screwing up commerce.
They should dump the agreement for all but regular letter mail, it makes no sense otherwise.
It's rational if the price of shipping is more transparent and consistent with the actual, underlying cost.
For example, if this system did not exist, and China was subsidising their own shipping to the US, ironically, it would be illegal under WTO rules!
It's absurd and it should have ended long ago.
I still cannot believe that US companies have not been able to lobby to have this cut two decades ago.
The poor rate structure and widely publicized losses are due to artificial and quite excessive benefit pre pay mandates going out decades and a rate structure mandated by Congress for political reasons.
These changes were made during the Bush Administration.
2. It included a 10 year prepayment period. This ended in 2016. It is 2020. Current USPS financial woes have nothing to do with that act. We are now in the follow-on period in which the USPS is intended to be amortizing its remaining unfunded liability over 40 years, to 2056. And this 40 year amortization period is exactly the same length of time as private-sector employers are given.
3. The USPS gets ~$18 billion in taxpayer funding/subsidies annually.
Fact is both parties receive significant financial incentives aimed at privatizing the Post Office. There is no benefit to the American people down that path.
That analysis is incomplete and inaccurate. 3 is particularly egregious. Compute it prior to the act, and the arguments evaporate.
Another fact: That bill was, and remains unnecessary, and is intended to undermine an otherwise exemplary service.
I won't respond to this again.
And unlike police who, when trying to be profitable are driven by perverse incentives to be corrupt, the post office doing more business is hard to see as a bad thing.
Also as many others have mentioned, the Chinese shipping rates were much lower than domestic rates, to the level that cheap products made in the US couldn’t be given away for free cheaper than things could be imported from china. $0 + shipping cost more than similar products sold at a profit and shipped from China.
A public service doesn't but the USPS is effectively run as a highly (and hostilely) regulated private monopoly, rather than a public service.
The postal service is one of the few gov't agencies explicitly created in the Constitution; it's vital to national cohesion and commerce (especially rural areas).
> The Congress shall have Power...To establish Post Offices and post Roads
And that's it. The rest is left up to Congress to figure out; they could, if they chose, punt entirely and allow eg FedEx to run post offices. I think the USPS is vitally important, and we can make arguments for its role as a public good without being hyperbolic about it.
A nit: The postal service wasn't actually created in the Constitution. Congress is merely authorized to do so.
[1] https://about.usps.com/what/financials/10k-reports/fy2019.pd... Page 18, labeled "Controllable loss".
"The debt it carried jumped from $7 billion in 2008 to $10 billion in 2009. At the end of 2019, the GAO calculated that the Postal Service had $160.9 billion in debt, $119.3 billion of which came from retiree benefits" https://www.washingtonpost.com/business/2020/04/15/postal-se...
https://federalnewsnetwork.com/agency-oversight/2020/02/hous...
The Postal Accountability and Enhancement Act has pretty much been at the core of why the USPS has had such extreme woes.
https://en.wikipedia.org/wiki/Postal_Accountability_and_Enha...
Can you clarify? My understanding is that US Federal Employee retirement benefits (for new employees) have been comparable to private sector benefits since some point in the 80s, though existing employees at that time kept their old, more generous pension plan.
I think this might be what I'm talking about: https://www.opm.gov/retirement-services/fers-information/
> Unless you think the money to pay pensions will magically materialize out of thin air in the future, I don't see what's artificial about it. They have obligations to pay and recognize them.
My understanding is every other entity that has similar obligations is allowed to pay them as they go.
*John Oliver
This isn't about a policy that costs money, and creates benefits. It's not even really a policy. It's a side effect of quasi-diplomatic arrangements created decades ago... with no relationship between original goals and current outcomes.
Maybe it makes sense to subsidize a national package delivery. IF so, they can make a policy that does this, but this one isn't it.
However, in a world where basically 100% of the business of the postal service is junk advertising and amazon packages, subsidizing it is just a payout to business, and I agree that the externalities now greatly outweigh any social benefit.
Shipping from China is well past that point, though, it's clearly providing perverse incentives and it's good that it's changing.
I can absolutely see a situation where products being shipped from China are given cheaper rates than products shipped domestically. In fact, I expect that’s how it should be. Simply because for products from China, USPS would be tying up with the Chinese postal service, and due to the massive volumes they have, they would be able to offer extremely low rates that they couldn’t offer anyone in the US besides Amazon and Walmart maybe.
However, those rates should be profitable rates for USPS.
While I think your comment may have been imbuing a value judgement on my original comment where I wasn't making any.. it does bring up a good point. Obviously this mindset doesn't hold true across the board for all services.
The one that immediately comes to mind is farming. I think more people are averse to the idea of farmers/farming operations going bankrupt. I think most people would be fine with a pure wealth transfer to that industry to help it get through a massive downturn. But why does that industry get a general pass?
My guess is that food production is perceived as more of a core need than mail/package delivery. Even when mail/package delivery is an important part of a modern economy.
In the US, the idea is to disdain public services unless they can be used to socialize a cost of doing business. The USPS has been allowed to function because it made shipping cheaper, which is the lifeblood of business. However, other political calculations are coming to the fore (such as international competition) so they are thinking of kneecapping cheap rates to China.